I own mineral rights for some property in Tarrant county. Chesapeake Energy leased them from me 5 years ago and that lease is about to expire. They never used the rights (and so I never got any royalties). Now they want to renew, and of course the bonus consideration is much less (about 1/4) of what it was back then.
Before I sign on again for another lease, I'd like to find out if their offer is fair, and what the ballpark range is for mineral rights leases in the Barnett Shale in these days of very low nat gas prices. I realize that many factors can come into play, but how do I determine if they are making a fair offer, or if I can get more elsewhere?
Any help appreciated.
Thanks,
Rand
Dear Rand,
I was in a similar situation about 6 months ago, we had leased 3 years ago for $5000 an acre, but now they said we had them in a Bind, come to be true because of the deal they made with Total for 25% of the Revenue from the Barnett Shale Wells. But they only offered us $2750.00 per acre and wanted a 5 year lease, saying they did not plan to drill. I would not give in to more than a 3 year lease with 2 year option, which means they pay again. You will want to retain an attorney for this, if you don't have a ton to spend. I suggest you sign up for Prepaid legal, about $20 a month, There Oil and Gas Attorney is good. He helped me on several of the leases I have. Their Offer is a first offer, that is why you need a attorney to help you make the offer you give them. You will want the Pugh Clause where they have to use all you land, not just choice pieces they deem needed. Also new clause we learn about, where you get back the minerals from 100 feet below their finished hole, to china just in case another discovery if found, then you can lease again. Continued Success in all Endeavors.
Chris
Thanks very much, Chris. All very useful information.
Is Prepaid Legal the same as "LegalShield"? That's the site that came up from a Google search.
Rand
Chris Wilson said:
Dear Rand,
I was in a similar situation about 6 months ago, we had leased 3 years ago for $5000 an acre, but now they said we had them in a Bind, come to be true because of the deal they made with Total for 25% of the Revenue from the Barnett Shale Wells. But they only offered us $2750.00 per acre and wanted a 5 year lease, saying they did not plan to drill. I would not give in to more than a 3 year lease with 2 year option, which means they pay again. You will want to retain an attorney for this, if you don't have a ton to spend. I suggest you sign up for Prepaid legal, about $20 a month, There Oil and Gas Attorney is good. He helped me on several of the leases I have. Their Offer is a first offer, that is why you need a attorney to help you make the offer you give them. You will want the Pugh Clause where they have to use all you land, not just choice pieces they deem needed. Also new clause we learn about, where you get back the minerals from 100 feet below their finished hole, to china just in case another discovery if found, then you can lease again. Continued Success in all Endeavors.
Chris